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PROBLEM 3-6 (Continued)

(b)

YORKIS PEREZ, CONSULTING ENGINEER


Income Statement
For the Year Ended December 31, 2014
Service revenue ($100,000 $6,000 + $4,900) ..........
Expenses
Salaries and wages expense
($30,500+$2,510) .............................................
Rent expense ($9,750 $750) ............................
Depreciation expense.........................................
Bad debt expense ...............................................
Utilities expenses ...............................................
Office expense ....................................................
Insurance expense .............................................
Interest expense .................................................
Total expenses...............................................
Net income ..................................................................

$98,900
$33,010
9,000
2,500
1,430
1,080
720
480
60
48,280
$50,620

YORKIS PEREZ, CONSULTING ENGINEER


Statement of Owners Capital
For the Year Ended December 31, 2014
Onwers Capital, January 1 ........................................
Add: Net income .........................................................
Less: Withdrawals ......................................................
Owners capital, December 31 ...................................
(a)

Owners capitaltrial balance ..............................


Withdrawals during the year .................................
Owners capital, as of January 1, 2014 ..................

Copyright 2013 John Wiley & Sons, Inc.

Kieso, Intermediate Accounting, 15/e, Solutions Manual

$ 52,010a
50,620
(17,000)
$ 85,630
$ 35,010
17,000
$ 52,010

(For Instructor Use Only)

3-49

PROBLEM 3-6 (Continued)


YORKIS PEREZ, CONSULTING ENGINEER
Balance Sheet
December 31, 2014
Assets
Current assets
Cash ...........................................
$29,500
Accounts receivable
($49,600 + $4,900) .................. $54,500
Less: Allowance for
doubtful accounts ..........
2,180* 52,320
Supplies .....................................
1,960
Prepaid insurance
($1,100 $480) .......................
620
Prepaid rent ...............................
750
Total current assets............
$ 85,150
Equipment.........................................
25,000
Less: Accumulated depreciation ...
8,750**
16,250
Total assets .........................
$101,400

Liabilities and owners equity


Current liabilities
Notes payable ............................
Unearned service revenue ........
Salaries and wages payable .....
Interest payable .........................

$7,200
6,000
2,510
60

Owners Capital
($35,010 + $50,620) .......................
Total liabilities and
owners equity .................

$ 15,770
85,630
$101,400

*($750 + $1,430)
**($6,250 + $2,500)

3-50

Copyright 2013 John Wiley & Sons, Inc.

Kieso, Intermediate Accounting, 15/e, Solutions Manual

(For Instructor Use Only)

PROBLEM 3-7
(a)

Sep. 30 Accounts Receivable ..........................................


Service Revenue ..........................................

600

30 Rent Expense ......................................................


Prepaid Rent ................................................

900

30 Supplies Expense ...............................................


Supplies .......................................................

1,020

30 Depreciation Expense ........................................


Accumulated DepreciationEquipment ....

350

30 Interest Expense .................................................


Interest Payable ...........................................

50

30 Unearned Rent Revenue ....................................


Rent Revenue ..............................................

200

30 Salaries and Wages Expense.............................


Salaries and Wages Payable ......................

600

(b)

600
900
1,020
350
50
200
600

ROLLING HILLS GOLF INC.


Income Statement
For the Quarter Ended September 30, 2014
Revenues
Service revenue ..................................................
Rent revenue ......................................................
Total revenue ...............................................
Expenses
Salaries and wages expense .............................
Rent expense ......................................................
Supplies expense ...............................................
Utilities expenses ...............................................
Depreciation expense ........................................
Interest expense .................................................
Total expenses ..............................................
Net income ..................................................................

Copyright 2013 John Wiley & Sons, Inc.

Kieso, Intermediate Accounting, 15/e, Solutions Manual

$14,700
900
$15,600
$9,400
1,800
1,020
470
350
50
13,090
$ 2,510

(For Instructor Use Only)

3-51

PROBLEM 3-7 (Continued)


ROLLING HILLS GOLF INC.
Retained Earnings Statement
For the Quarter Ended September 30, 2014
Retained earnings, July 1, 2014 ............................................
Add: Net income .....................................................................
Less: Dividends ......................................................................
Retained earnings, September 30, 2014 ...............................

0
2,510
600
$1,910

ROLLING HILLS GOLF INC.


Balance Sheet
September 30, 2014
Assets
Current assets
Cash ............................................
Accounts receivable ..................
Supplies ......................................
Prepaid rent expense .................
Total current assets ............
Equipment .........................................
Less: Accumulated depreciation ....
Total assets .........................
Liabilities and Stockholders Equity
Current liabilities
Notes payable ............................
Accounts payable ......................
Unearned rent revenue ..............
Salaries and wages payable .....
Interest payable .........................
Stockholders Equity
Common stock..................................
Retained earnings ............................
Total stockholders equity
Total liabilities and
stockholders equity .........

3-52

Copyright 2013 John Wiley & Sons, Inc.

$ 6,700
1,000
180
900
$ 8,780
15,000
350

$ 5,000
1,070
800
600
50

14,650
$23,430

$ 7,520

14,000
1,910

Kieso, Intermediate Accounting, 15/e, Solutions Manual

15,910
$23,430

(For Instructor Use Only)

PROBLEM 3-7 (Continued)


(c) The following accounts would be closed: Service Revenue, Rent Revenue,
Salaries and Wages Expense, Rent Expense, Utilities Expenses,
Depreciation Expense, Supplies Expense, Interest Expense, Dividends.
(d) Interest of 12% per year equals a monthly rate of 1%; monthly interest
is $50 ($5,000 X 1%). Since total interest expense is $50, the note has
been outstanding one month.

Copyright 2013 John Wiley & Sons, Inc.

Kieso, Intermediate Accounting, 15/e, Solutions Manual

(For Instructor Use Only)

3-53

PROBLEM 3-8
(a)
Dec. 31 Accounts Receivable .........................................
Service Revenue .........................................

(b)

3,500

31 Supplies Expense ..............................................


Supplies ......................................................

2,900

31 Insurance Expense ............................................


Prepaid Insurance.......................................

1,560

31 Depreciation Expense........................................
Accumulated DepreciationEquipment ...

5,000

31 Interest Expense ................................................


Interest Payable ..........................................

560

31 Unearned Service Revenue ...............................


Service Revenue .........................................

1,900

31 Salaries and Wages Expense ............................


Salaries and Wages Payable ......................

820

2,900
1,560
5,000
560
1,900
820

VEDULA ADVERTISING AGENCY


Income Statement
For the Year Ended December 31, 2014
Revenues
Service revenue ..................................................
Expenses
Salaries and wages expense .............................
Depreciation expense ........................................
Rent expense ......................................................
Supplies expense ...............................................
Insurance expense .............................................
Interest expense .................................................
Total expenses...............................................
Net income ..................................................................

3-54

3,500

Copyright 2013 John Wiley & Sons, Inc.

$63,000
$9,820
5,000
4,350
2,900
1,560
560

Kieso, Intermediate Accounting, 15/e, Solutions Manual

24,190
$38,810

(For Instructor Use Only)